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Finally, petitioner claimed that he is entitled to a $150
deduction for the membership fee to join the Jefferson County
Chamber of Commerce. Petitioner testified, and we believe, that
he joined the Chamber of Commerce in order to achieve more
recognition for his business. This expense is deductible under
section 162.
As noted supra, respondent determined a section 6662(d)
penalty of $4,965 for 2003. Pursuant to section 6662(a) and
(b)(2), a taxpayer may be liable for a penalty of 20 percent of
the portion of an underpayment of tax attributable to a
substantial understatement of income tax. The term
“understatement” means the excess of the amount of tax required to
be shown on a return over the amount of tax imposed which is shown
on the return, reduced by any rebate (within the meaning of
section 6211(b)(2)). Sec. 6662(d)(2)(A). Generally, an
understatement is a “substantial understatement” when the
understatement exceeds the greater of $5,000 or 10 percent of the
amount of tax required to be shown on the return. Sec.
6662(d)(1)(A). The Commissioner has the burden of production with
respect to the accuracy-related penalty. Sec. 7491(c). To meet
this burden, the Commissioner must produce sufficient evidence
indicating that it is appropriate to impose the penalty. See
Higbee v. Commissioner, 116 T.C. 438, 446 (2001). Once the
Commissioner meets this burden of production, the taxpayer must
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